LOGISTICS CENTRE OHRDRUF

www.hermesworld.com Sourcing & Product I Transport Logistics I Full-Service E-Commerce I Distribution “The growth rates and other developments in the distance-selling retail sector consistently call for new solutions that lead towards better warehouse optimisation. By introducing a driverless transport system Hermes Fulfilment has set new standards in the European logistics sector.”

Jörg Reichenbach, head of the logistics centre Ohrdruf OUR HISTORY

Following the reunification of the distance-selling retail Initially the facility focuses its efforts on its two-man handling service. sector flourishes like never before and the logistics capabilities This area of the business deals with goods which are so large or of the Otto Group no longer suffice. In 1990 the decision is heavy that they need to be handled by two workers. In 1996 the made to build a new logistics centre that specialises in handling product range in Ohrdruf is expanded to include items than can larger items such as fridges, washing machines and furniture. be handled by one warehouse worker, carpets for instance. At the beginning of 1991 a 238,000-square-metre site is chosen in the small Thuringian town of Ohrdruf. The town is situated As of 2006 the logistics centre in Ohrdruf is operated by Hermes 40 kilometres south-west of and offers excellent access- Fulfilment. The returns operations are restructured and state- ibility to the German road network via the A4 motorway Bad of-the-art technologies introduced. One year later Hermes Hersfeld–Dresden. Fulfilment starts using a stacker control system that optimises the utilisation of the stacker fleet and reduces the number of The foundation-stone-laying ceremony takes place on 22 April empty trips. In 2010 the facility distances itself from its two- 1992. Hermes Fulfilment is a member of the Otto Group. man handling service. Its focus is now on handling the logistics At about the same time, after a six-month construction period, a hub The Otto Group invests some €97 million in the logistics processes associated with larger items weighing up to 31.5 run by Hermes Logistik Gruppe Deutschland (HLGD) is integrated centre. It goes into operation on 1 October 1993. The facil- kilograms. into the logistics centre. ity has 90,000 square metres of warehouse space and a total storage capacity of some 50,000 cubic metres. The At the end of 2011 a driverless transport system goes into oper- Today around six million items a year are moved through the Ohrdruf returns operations are allocated an area of 12,000 square ation. This system ensures that the process of picking and dis- logistics centre. Some 4.5 million of these are customer orders and From left to right: Professor Peer Witten, 1984 to 2004 Member of the Execu- tive Board of the Otto Group, responsible for business processes; Dr Dieter metres. It is here that returned goods are inspected to see patching to customers runs even more smoothly. The driverless 1.5 million are returns. Hermes Fulfilment employs around 300 Reinholz, 1990 to 2000 administrative officer for the district of ; if they are still in working order. They can also be reworked, if transport system used in Ohrdruf is the first system in Europe people in Ohrdruf, making it one of the largest employers in the Dr Bernhard Vogel, 1992 to 2003 Premier of the Free State of ; Dr Otto, 1981 to October 2007 chairman of the board of directors needed. that can also operate in automatic mode with a man aboard. local area. of the Otto Group; Klaus Scheikel, 1990 to 2006 mayor of Ohrdruf CONTENTS

08 Hermes Fulfilment – an overview 13 Warehouse and returns process 14 Goods-in area 17 Stacker control system 18 Inspection/reworking 21 Driverless transport system/ picking warehouse 25 Returns process 26 Goods-out area FULFILMENT

ACCOUNTS WEB STORE RECEIVABLE SERVICES

CUSTOMER CARE RETURNS MANAGEMENT

PAYMENT IT

WAREHOUSING DISTRIBUTION HERMES FULFILMENT AN OVERVIEW

Headquartered in Hamburg, Hermes Fulfilment GmbH is a member tics services for as many as one million different products and of the Otto Group and provides a wide range of supply chain handles some 300 million items a year. services to the distance-selling retail sector from the company’s four logistics centres. These services range from the design of a The spectrum of goods ranges from smartphones, tablet devices web store to its operation, from accounts receivable, returns and textiles to jewellery, furniture and washing machines. management, financial and call centre services to procurement, The clients of Hermes Fulfilment GmbH primarily operate in the warehousing and distribution. Hermes Fulfilment provides logis- consumer goods industry.

08_Logistics Centre Ohrdruf

WAREHOUSE AND RETURNS PROCESS

GOODS-IN AREA

INSPECTION INCOMING RETURNS REWORKING

WAREHOUSING RETURNS PROCESS

PICKING VALUE-ADDED SERVICE

SORTING GOODS RETURNS GOODS-OUT AREA RECYCLING

12_Logistics Centre Ohrdruf GOODS-IN AREA

As many as 20,000 boxes containing goods from all over the world are delivered to the Ohrdruf logistics centre every day. On any one day these goods are typically delivered in 40 to 60 trucks that can pull up at one of the 68 goods-in gates. Stackers, also known as indus- trial trucks, are used to help unload the delivery trucks. Ideally the goods are delivered by the suppliers on pallets. However, if they arrive in individual boxes or packaging units, i.e. as loose goods, be- fore they are placed in storage they are sorted and put on pallets.

When the pallets have passed through incoming goods inspection they are given a barcode that contains information such as the item number, dimensions, quantity, etc. Before the pallet is placed in storage the barcode is read by a scanner – for the first but not for the 40 to 60 truck last time on its way through the logis- deliveries a day tics centre. Once this data has been 68 goods-in gates captured by the warehouse man- Computer-aided agement system, all subsequent registration of processes, movements and trans- incoming goods actions are controlled or directed by the system.

The stackers then transport the pallets of goods and place them on storage shelves that can be anything up to ten metres in height. An intelligent stacker control system maps out the routes that the stackers take through the logistics centre.

14_Logistics Centre Ohrdruf STACKER CONTROL SYSTEM

Based on the data that has been recorded in the retrieved this is confirmed by scanning the appro- system the warehouse management system de- priate information into the system. cides exactly where in the warehouse the pallet should be stored. A transportation order is given The stacker control system works largely auto- to the stacker control system which then chooses matically, constantly receiving orders from the EINE ZEILE MEHR TEXT WÄRE SCHÖN the next available stacker. The warehouse management system, driver picks up the pallet and collecting and collating them and Best possible routes scans the barcode on the pallet. mapped out for storage passing them on to the stacker He can see on his monitor where and retrieval fleet to carry them out. The stacker

exactly the pallet should be put System operates with a control system always knows the away. He confirms where he has fleet of 20 stackers exact location of each of the placed the pallet in storage by Around 1,500 transpor- stackers and additional informa- scanning the storage location tation orders a day tion about it, for instance its lift number. Communication via height. The control system is there- wireless LAN fore able to map out the best The driver receives the next trans- route through the warehouse for portation order via the radio data transmission each stacker. This leads to shorter lead times and terminal. This may be another order to put a pallet reduces the number of empty trips by more than away, an order to retrieve a pallet or a replenish- 25 per cent in comparison with the situation before ment order. Whenever any goods are stored or the stacker control system was introduced.

Logistics Centre Ohrdruf_17 INSPECTION REWORKING

Before the incoming goods are placed in storage If everything is OK the goods are released for sale. random quality checks are carried out on a certain Random samples If any faults or defects are found the retailer decides taken for percentage of the items in accordance with the in- inspection/quality whether the item can be reworked into a saleable structions provided by the retailer. For instance, tech- control product. For instance missing bags of screws, or fit- nical devices are tested to see if they work and flat Rework activities in tings, or missing assembly instructions can easily furniture is assembled. Do the goods comply with the accordance with be replaced, parts can be exchanged, items can be instructions pro- retailer’s quality standards? Is the quality of the mater- repackaged or additional assembly elements can vided by the client ials acceptable? Is the furniture easy to assemble? Are be included. If the fault or defect is too serious to Processing of retail- any screws missing? Does the carpet have any visible ers’ special orders be rectified the entire delivery is returned to the defects? Does the LED television work properly? supplier.

Logistics Centre Ohrdruf_19 DRIVERLESS TRANSPORT SYSTEM PICKING WAREHOUSE

As if by magic, driverless picking vehicles move through the high bay ware- house. The special feature of the driverless transport system is its control centre, which is able to map out the most convenient route through the warehouse for each of the picking vehicles. The driverless vehicle is directed to the first storage location on its route. At the designated picking location a warehouse employee picks the given quantity of the item, affixes a label to the items and places them on the pallet. As soon as the picker presses the button to confirm that he has picked the goods, the vehicle automatic- ally drives to the next picking location. When the picking orders have been completed or the pallets are full, the vehicle automatically drives to the handover station of the sorting system in the goods-out area.

On its way back from the goods-out area it will take a stack of empty pallets and return them to the robot station. This is where the pallets remain until they are put back onto a picking vehicle by a special robot so that the next order can be picked. These pallets have been specifically developed for the requirements of the driverless transport system. They weigh 72 kilograms and have collapsible side panels.

Logistics Centre Ohrdruf_21 At any time and from any location in the warehouse pickers metres per hour. Whenever its battery gets low the vehicle auto- can call for a new vehicle with empty pallets via wireless LAN. matically drives to one of 52 special charging stations. The batteries The driverless transport system uses a total of 52 vehicles. are recharged via contacts in the warehouse floor. The vehicles Forty of these vehicles are used to pick items can run for about 14 hours on a fully charged from the lower shelves. Twelve of them have a battery. The driverless transport system used in 52 driverless lift height of 4.50 metres and are used to pick Ohrdruf is the first system in Europe that can also vehicles items from the second and third levels of the operate in automatic mode with a man aboard – 250 special pallets warehouse. The vehicles run on a 5-kilometre something that is often done when items need 52 battery magnetic track and when operating in fully auto- to be picked from the second or third levels of charging points matic mode can reach a speed of around 5 kilo- the warehouse.

22_Logistics Centre Ohrdruf RETURNS PROCESS

Every day as many as 20 freight containers provided by the retailer. These criteria deter- filled with items that have been returned by Scanners used to register mine when an item is considered faultless and incoming returns customers arrive at the logistics centre in in a condition to be put back on the shelf for Ohrdruf. As the goods are being unloaded Returns inspected at resale. If this is the case it is repackaged and 60 workstations they are pre-sorted according to their goods the customer will receive a refund. Returns group. Bulky goods such as bicycles or items of 20 certified workshop that cannot immediately be put back on the furniture that are too large to be moved workstations shelf for resale are routed to the reworking by conveyor are handled separately. The area. This workshop area has been certified majority of items travel along conveyors by leading brands and has 20 workstations. to the inspection area on the upper floor. As they move along This is where items and devices are examined to see if they the conveyor they are registered by an overhead scanner and work, appliances are cleaned, faulty components are replaced routed to one of 60 inspection stations. Which station they and software updated. If a return cannot be put back on the are routed to depends on the item type. At these stations shelf for resale, the retailer decides whether the item should warehouse assistants check to see whether the items are in be sent back to the manufacturer, resold at a reduced price working order, whether they are complete and whether they or disposed of. The certified work- can be resold. Has the espresso machine been returned un- shop area also provides technical damaged? Is anything wrong with the home cinema system? support services. It stocks spare Are any cables, accessories or instructions for use missing? parts and repairs faulty devices in compliance with the laws under Each goods group, whether it be electronics, items of furni- which consumers are granted statu- ture, blinds or carpets, has its own special assessment criteria, tory warranty rights.

Logistics Centre Ohrdruf_25 GOODS-OUT AREA

Lifts are used to deliver the full pallets to the sorting Every second a barcode is read. Based on this infor- facility of the hub that is run by Hermes Logistik Pallets delivered to mation each consignment is then automatically sorting facility via Gruppe Deutschland (HLGD), which is also part of the three lifts sorted according to its shipping destination and Otto Group. Every hour this facility can sort around routed via a telescopic conveyor to a truck waiting 5,500 consignments 5,500 consignments of big and bulky goods accord- of big and bulky at one of the 96 goods-out gates. The only items ing to their shipping destination. It was specifically goods can be sorted that are sorted by hand are items that are more every hour developed for use in the Ohrdruf logistics centre and than two metres long. The Ohrdruf logistics centre can cope with as many as 70 different shipping Shipment to 59 can handle as many as 15 million consignments a delivery points destinations. The goods are transported along the throughout Germany year. Deliveries are made throughout the whole of conveyors at a speed of 2.2 metres a second. Europe.

26_Logistics Centre Ohrdruf Publisher Hermes Fulfilment GmbH Logistics Centre Ohrdruf Hamburger Strasse 1 99885 Ohrdruf

T. +49 (0)3624 3330 F. +49 (0)3624 333 400 [email protected]

Coordination Katrin Borzym (Marketing)

Editor Ad Hoc Gesellschaft für Public Relations mbH, Gütersloh

Concept and design Schön Communication, Hamburg

Photos Hermes Fulfilment, Urs Küster, Otto Group, FSC-Logo DS Automotion GmbH, Fotograf Nik Fleischmann

Status October 2014 www.hermesworld.com Sourcing & Product I Transport Logistics I Full-Service E-Commerce I Distribution